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May 19, 2014
Message from the President
 One of the more interesting recent developments in the housing market has been the rise of the single-family rental business, where REITs and other institutional investors have bought homes for use as rental properties. Observers have asked two questions about this development. First, is it a trade on house prices, or is it a sustainable business? And second, does the entry of large investors into these housing markets have a positive or negative impact on neighborhoods and the people who live in them?
A careful look at the data reveals that REITs and other institutional investors have been instrumental in helping to smooth the transition to a lower rate of homeownership from the elevated level that existed prior to the Great Financial Crisis. The shift to a market where millions more families are renters is not frictionless, and requires both capital to purchase homes for rent, and management expertise to operate the properties. In many metro areas across the country, the scale of the transition has required more capital than local investors could provide. Only a few years ago the biggest worry in these markets was that, if no one stepped up to buy foreclosed properties, they might sit empty and become a blight on their neighborhoods while displaced families would have trouble finding suitable places to live.
As a NAREIT analysis highlights below, REITs performed the role originally envisioned by Congress in 1960, raising capital to invest in income-producing real estate and providing professional management of that real estate. By doing so, they have helped to alleviate strains in housing markets in metro areas across the country and serve the housing needs of many families. Without REITs’ investments in these communities to help meet the long-term need for suitable rental properties, the housing market recovery might have been even more protracted and debilitating.
Steven A. Wechsler
President and CEO
Market Commentary: Forces Driving Single-Family Rentals
NAREIT’s latest Economic Update (May 12) traces the growth of the single-family rental (SFR) housing market in the aftermath of the Great Financial Crisis.
The shift back to a lower rate of home ownership has moved a large number of households into rental properties. Many households have chosen to rent single-family properties rather than apartments or other multifamily properties because of size and neighborhood characteristics better suited for their needs, such as raising a family. The transition and refinancing of a large part of the housing stock from ownership to rental has required investments of hundreds of billions of dollars, as well as management expertise to manage and operate large portfolios of rental properties. REITs and other institutional investors have provided much-needed capital and management in many metro areas where the scale of the transition was greater than local investors could provide.
The rise of the SFR REIT has demonstrated once again the flexibility of the REIT approach to real estate investment in raising capital and in implementing operational scale economies to provide professional management of income-producing properties. In this way, these companies have helped to make suitable housing available for hundreds of thousands of households while also promoting the housing market recovery.
(Contact: Calvin Schnure at cschnure@nareit.com)
Senate Banking Committee Approves Legislation that Would Overhaul the Mortgage Finance Market
 On May 15, the Senate Committee on Banking, Housing and Urban Affairs approved S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2013.
Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) had delayed consideration of the bill to try to gather more support amongst the committee’s members, which they failed to accomplish. The committee voted 13-9 in favor of the legislation.
The limited support for the bill suggested by the vote makes it likely that the legislation for now lacks the momentum needed to move to the Senate floor.
(Contact: Victoria Rostow at vrostow@nareit.com)
NAREIT Attends State Association of County Retirement Systems Spring Conference
 In conjunction with outreach program activities intended to increase the level of investment in REITs by public sector pension plans, NAREIT supports and participates in a number of national and state associations representing the interests of public sector pension and retirement plans.
Last week, Meredith Despins, NAREIT’s vice president of investment affairs & investor education, participated in the State Association of County Retirement Systems (SACRS) Spring Conference in Sacramento, California. The conference featured presentations and panel discussions on a wide range of issues intended to address the challenges and opportunities facing California’s retirement systems. Topics included pension reform and funding challenges, benefit adequacy, and investment themes and best practices investors might employ to successfully position their pension and welfare benefits portfolios.
SACRS is an association of 20 California county retirement systems whose total aggregated system assets are in excess of $115 billion. SACRS holds two conferences each year at which all twenty counties participate through attendance by trustees, administrators, treasurers and retirement system staff. Education and legislation are the principle focus of these events, with a particular emphasis on providing education on investments and fiduciary responsibility. A number of these retirement systems invest in REITs as a way of gaining real estate exposure, including some of the largest: Los Angeles County, Orange County and Sacramento County.
Through the SACRS conference, NAREIT was afforded the opportunity to maintain an ongoing dialogue with many organizations that we visit through our direct meetings program, including both the retirement systems and a number of the most influential investment consultants in the industry.
(Contact: Meredith Despins at mdespins@nareit.com)
Seven REITs Named as 2014 Green Lease Leaders
 Seven REITs have been named as 2014 Green Lease Leaders by a new program that recognizes property owners, tenants and brokers who are effectively using leases to save energy in commercial buildings.
Brandywine Realty Trust (NYSE: BDN), Empire State Realty Trust (NYSE: ESRT), Government Properties Income Trust (NYSE: GOV), Kilroy Realty Corp. (NYSE: KRC), Kimco Realty Corp. (NYSE: KIM), Liberty Property Trust (NYSE: LRY) and Regency Centers Corp. (NYSE: REG) were among the 2014 winners selected by the Institute for Market Transformation (IMT), a non-profit group, and the Department of Energy’s (DOE) Better Buildings Alliance.
“As a contractual arrangement, the lease is a powerful tool to help landlords and tenants increase building efficiency,” said Kristen Taddonio, manager of DOE’s Better Building Alliance.
Companies were selected based on lease clauses that improved sustainability on several fronts, including: sharing the costs of energy-saving improvements; ensuring tenants build out to green standards; sharing access to energy consumption data; and encouraging cooperation on environmental initiatives.
(Contact: Sarah Borchersen-Keto at sborchersen-keto@nareit.com)
REIT.com Video: Ray Beeman, Tax Counsel, House Ways and Means Committee
 Earlier this month, REIT.com interviewed Ray Beeman, tax counsel and special advisor for tax reform to the U.S. House of Representatives Committee on Ways and Means. Beeman played a key role in creating Committee Chairman Dave Camp’s (R-MI) proposal for comprehensive tax reform released earlier this year.
Beeman told REIT.com that the key principles put forth in the discussion draft were to bring more simplicity and certainty to the U.S. tax system while stimulating the economy.
Beeman said the draft proposal explores all areas of the economy, including REITs and real estate investment. The section of the draft most applicable to REITs was drafted with the goal of supporting the REIT approach to real estate investment, Beeman said. Among the areas addressed in the proposal are tax-free spin-offs of REITs and accounting for built-in gains.
The video is now available on REIT.com exclusively for NAREIT members.
(Contact: Matt Bechard at mbechard@nareit.com)
Latest Issue of REIT Magazine Now Available
 The May/June 2014 issue of REIT magazine is now available in print and online.
The issue’s cover story features an interview with Annaly Capital Management, Inc. (NYSE: NLY) Chairman and CEO Wellington Denahan, who discusses her transition to becoming the public face of the mortgage REIT.
The issue’s feature articles include “The Capital of Transparency,” which looks at the high marks that REITs are receiving for their corporate governance. In “One, Not Done” some of the newest members of the REIT CEO community talk about lessons learned and obstacles overcome in their first year on the job.
The issue also profiles Kilroy Realty Corp.’s expansion up and down the West Coast in “Golden State Squared.”
(Contact: Matt Bechard at mbechard@nareit.com)
NAREIT Welcomes New Corporate Member
 NAREIT is pleased to welcome new Corporate Member Bluerock Residential Growth REIT (NYSE: BRG), a publicly traded, externally-advised equity REIT that invests in institutional-quality multifamily properties in U.S. growth markets, including Florida, Georgia, Illinois, Michigan, Tennessee and Virginia. Based in New York, Bluerock, which began as a public, non-listed REIT, is now listed on the NYSE under the ticker symbol “BRG.” Ramin Kamfar is the founder and CEO, and Jordan Ruddy is the president and COO.
(Contact: Bonnie Gottlieb at bgottlieb@nareit.com)
NewsBrief Will Not Publish Next Week
NewsBrief will not publish next Monday in observance of Memorial Day. NewsBrief will return Monday, June 2.
(Contact: Matt Bechard at mbechard@nareit.com)
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